Rental Startup Airbnb Goes Hyper Local, but Is It Safe?

Heesun Wee

Friday, 16 Nov 2012 | 10:04 AM ETCNBC.com

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The startup Airbnb, an online marketplace that aggregates short-term rental listings, has launched a new way to filter results by neighborhood features, such as "nightlife" or "artsy." But is the site trustworthy and safe?

Source: airbnb.com

Called "Neighborhoods," the feature allows site users to curate results at a hyper-local level. Users can sift through neighborhood characteristics and data such as maps, photography, public transportation, parking details and tips to find the information they need.

The online feature takes advantage of what travelers have known for years: It's all about the location.

But in the evolution of Airbnb, the 4-year-old startup has encountered some criticism about whether the site keeps tabs on users. The company has also tussled with New York City, where state law limits short-term rentals.

Founded in August 2008, Airbnb (pronounced air-bee-n-bee) allows individual home and apartment owners to rent properties as holiday accommodations — sometimes for hundreds of dollars less than local hotel rooms. Site users span 30,000 cities and 192 countries.

Trust and Safety Concerns

But with growth has come questions about how Airbnb polices individuals, who list rental properties on the site. There have been reports of apartments getting trashed by guests.

And Airbnb does not perform background checks on users, according to their website. So someone listing a short-term rental, for example, could actually be a renter, not a legal owner of the space.

The company points to its site safeguards: Each booking is covered by a free "Host Guarantee" or insurance, which will reimburse users for property damage.

Those offering properties can earn positive reviews, and thus earn more business, by building a solid reputation.

And Airbnb allows users to flag suspicious activity. "We created user flagging to allow community members to alert us of any user, listing, or message they feel is suspicious or inappropriate," according to the company website.

How Airbnb Works

While it's free to list your space on the site, the company pockets 3 percent of each reservation.

Airbnb also charges guests a service fee that ranges from 6 to 12 percent for every reservation booked, depending on the total cost of the reservation, according to the website.

Based in San Francisco, the startup has been helping those affected by Super Storm Sandy in the Northeast.

Despite this feel-good partnership, NYC and Airbnb have been at odds. Under a 2011 New York state law, residents can rent out rooms in apartments they occupy, but not the entire space, Bloomberg Businessweek reported. Airbnb, however, lists full apartments for rent, not just rooms.

An Airbnb spokeswoman in New York City said, "Under our terms of service, all users agree to comply with applicable laws and regulations."

In addition to site safeguards, site co-founder and Chief Executive Brian Chesky told the BBC that Airbnb's community is based on mutual trust and online reputations — no anonymity allowed. He said the Internet is evolving beyond online relationships using sites such as Facebook, nd that people want to get together in the real world through real-life interactions.

"Trust is the currency that lubricates this entire system (and) makes sharing possible in this kind of economy," Chesky said in June.

'Neighborhoods' Launches

Questions about the site haven't deterred the upstart from evolving. The new "Neighborhoods" feature is launching initially with local details on New York, Paris, London, San Francisco, Washington D.C., Berlin and Rio de Janeiro.

Rooms and properties listed on the site can be more affordable than hotel rooms. Consider a room in Soho in Manhattan for $110 a night, or an entire apartment in Barcelona for $130 a night, according to recent Airbnb results.

"By going deeper and tapping into local knowledge, we are introducing our community to a neighborhood's personality so they can match it with their own," said Chesky.